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Saturday, November 7, 2009

US Job Growth Likely By Christmas

Now that the US recovery is in full swing, many continue to asked "when will this newfound economic growth produce new jobs?"

This past week all eyes were on job numbers. And there were some encouraging signs.

First, Challenger, Gray & Christmas, Inc. announced on Wednesday that planned layoffs at U.S. firms fell for a third straight month in October to a 19-month low. Announced job cut rates are now at levels that are below average.

Then on Thursday Monster's employment index was reported to rise an additional point in October to 120 indicating an ongoing improvement in job demand. The Monster Employment Index is a comprehensive monthly analysis of U.S. online job demand.

And finally, initial jobless claims are clearly on the decline, down 20,000 in the Oct. 31 week to 512,000 (prior week revised 2,000 higher to 532,000). The four-week average is down for the ninth straight week, 3,000 lower at 523,750 for a 25,000 decrease from late September.

So just when will this strong recovery start producing new jobs?

The answer is likely found in the significant decline in the number of jobs lost since March. As can be seen from the linear trending in the chart below, if the current economic climate stays intact, it is quite likely that we will actually see job growth starting sometime in December.


  1. GNE,

    I've been following your blog for about a year now and you've been right on just about everything, but I do note that you predicted several months ago that unemployment would peak at around 9% (even Dr. Doom said it would peak at 9% when he first predicted the credit crisis). Do you think that it's possible that there are some structural changes going on in the economy that will keep unemployment high for some years to come? I know that in my industry, law, we're seeing the elimination of many jobs and we are telling new law graduates that they will not be able to start next year, if at all.

  2. Anonymous, (from close to Atlanta I think ;-),

    I really enjoy your comments and an attorney's eye on keeping me honest... so yes several of my predictions are a bit optimistic... I tend to intentionally err in that direction as I see mainstream media erring in the other direction -- especially Dr Doom...

    From one of my other readers (Larrysyr on Seeking Alpha):

    "Recessions are all about restructuring. Some companies and industries get weeded out, some survive to thrive later, some even get a foothold and take off during the downturn. Whatever the causes, the mechanics involve companies slashing costs (including payroll, accountants, and lawyers) in order to survive. When the downturn ends, the surviving companies (and industries) start growing again, start making new profits and then begin to hire. At first they hire temps. This is what we're seeing right now.

    Recessions always look bleak (and some are bleaker than others) But in past recessions (especially the 70s and 80s), the picture looked even worse. Double digit unemployment, underemployment, double digit inflation, deficits, devalued dollar, and the "misery index".

    I think the overall premise of this post - that the economy is improving - is correct. Actual job growth by December is a little too optimistic for me."
    [thanks Larry]

    Again I may be a bit too optimistic about December, but again I'll err on the side of being a bit too optimistic instead of too pessimistic... keep in mind we will not see the report on December jobs until the January release.

    Thanks much for reading and your continued comments and reasoned questions.

    PS. It would be great if you started using a psuedo-name for your thoughtful questions... that way all readers could see the consistency and wisdom in your line of questioning... (your choice of course - choose "Name/URL" below... you can leave URL blank if you want.)

  3. Nice graph on monthly job losses. I would worry though that if you back out temporary hiring for the holiday season it looks more like the start of a double dip recession than a straight line improving trend...


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